>Accounting homework help

>Accounting homework help.

 Select one of these short stories and respond as requested:

1) While performing an audit of TCC Corporation, the audit team noticed something that didn’t look right. The company’s receivables aging report showed that bank loan eligible receivables were approximately $91 million. The audit team calculated the bank loan eligible receivables to be approximately $50 million. The client didn’t identify specific accounts in writing off bad debts, there was extremely slow credit memo processing, and items that management had not focused on remained uncollectible and ineligible for financing. In addition, over the last two years, the company’s credit department has had unusually high turnover—four different people had held the credit manager position under an intimidating CFO. The current credit manager was a friend of the CFO and had worked with him at a previous company. After looking at some invoices and asking about customer information to confirm, the credit manager admitted to creating false documents and arranging fictitious sales with clients—all with the knowledge of the CFO.

What are some of the red flags that point to the possibility of fraud? What would you say was the main problem in this case that allowed the fraud to occur?

2) Joseph Gonzales recently bought a new business that included a small 20-room motel and coffee shop. He hired a young couple to run the business and plans to pay them a monthly salary. The couple will live for free in a small apartment behind the motel office and will be in charge of the daily operations of the motel and coffee shop. They will also be responsible for hiring and supervising the four or five part-time employees who will help with cleaning the rooms, cooking, and waiting on customers in the restaurant. The couple will also maintain records of rooms rented, meals served, and payments received (which can be in the form of cash, checks, or credit cards). They will make weekly deposits of the business’s proceeds at the local bank. Joseph lives about six hours away and will only be able to visit periodically.

What are your two biggest concerns about possible fraud on the part of the couple? For each concern, identify a possible control that could reduce the risk of fraud.

3) You are the owner of a privately owned, moderate-sized company. The business was founded over 20 years ago and has experienced impressive growth and profitability. The only frustrating thing, however, is that you know the company’s profits would be significantly higher if you could rid it of its problems with fraud. Your accountants estimate that the company has lost approximately 7 percent of its earnings to fraud over the past five years. The company has adequate controls in place, and you try to ensure that people don’t override them. Since you are the owner, however, you often bypass some controls. You know that you aren’t out to rob the company, so you believe that the controls aren’t applicable to you. You try to keep a close eye on most aspects of the business, but with about 500 employees, it’s difficult to know about everything that is going on. Employees have been caught in fraudulent activities in the past, but you have never bothered prosecuting them. You wish to avoid the negative publicity that would result, and you see no valid reason to publicly humiliate former employees—their shame won’t bring back the money they’ve stolen.

What aspects of the company can you change in order to reduce the amount of fraud that is occurring? Use the five factors described in the chapter relating to creating a culture of honesty, openness, and assistance to explain your answer.

>Accounting homework help


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